Bitcoin Options Traders Seem Doubtful When Entering Directional Trades


Bitcoin options data shows crypto traders are currently sold out and unsure about entering directional bets on future trades of the coin. This is the highest number of such investor sentiments on the coin since last May, when more than 50% of Bitcoin’s value fell.

Arcane Research’s report on Bitcoin

Crypto market analysis firm Arcane Research had recently published a report on Bitcoin’s performance. Their research found that the currency experienced low volatility of over 70%, confirming that this is the first time options traders have entered a sustained bearish direction since last May.

BTC is above $44K | Source: BTCUSD on TradingView.com

Meanwhile, Bitcoin options allow traders to trade on BTC price movements; as the currency rises in value, the price of the options rises. Consequently, the low volatility analyzed shows that investors are not ready to bet on the direction of the leading cryptocurrency. This is also the first time the currency’s options have been so cheap since May 2021.

Related literature | Bitcoin Dominance Will Continue to Decline in Favor of Ethereum, Altcoins, FTX US President

In addition, Arcane Research stated that the currency’s volatility skew has peaked since May last year. The volatility skew evaluates the difference between the market price and the call price. In general, the call option was more expensive than the pull options, causing downside options skew.

In addition, the recent depreciation of the BTC price, the current skew of the BTC option, has now reached the highest level since the general crypto crash in May 2021. This suggests more sellers than buyers in the coin, resulting in a bearish market.

Currently Bitcoin options investors are the most bearish in a long time. They are also hesitant to choose a direction in which they believe the BTC coin is moving. In addition, the report shows that this gives traders a signal to make cheap calls.

A brief overview of crypto options

Options allow traders to place trades on asset price directions. To complete a trade, the traders buy the opportunities when the digital asset reaches a predicted price. It’s also worth noting that options for volatile assets are in higher demand as they offer better opportunities for leverage. Consequently, high volatility crypto assets have more expensive options.

Despite chaos, Bitcoin price faces a reversal

Regardless of traders’ lack of confidence and hesitation in betting on Bitcoin options directions, the coin appears to be winning. On the 4-hour chart, Bitcoin has created an upward triangle pattern, showing a 15% increase from its previous high.

Related literature | TA: Bitcoin Can’t Test $45K, Why Dips Can Be Attractive

For the world’s largest crypto asset to reach its bullish milestone, it must cross the upper bound of the existing chart pattern, which is above $44k.

Featured image from Pixabay, chart from TradingView.com

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